Issue 276January/February 2013The Tipping Point

Reviews

Bio-economy

A bio-economy would be built with the building blocks of culture, design, technology and engineering, and founded on a worldview that sees people in their actual place – embedded in Nature. Tony Juniper explains his vision.
What Has Nature Ever Done for Us? How Money Does Really Grow on Trees, published by Profile Books, 2013. ISBN: 9781846685606.

Should future historians look back to our period and the achievements that symbolised the times we inhabit, I fear they might have few enduring sources of inspiration. Perhaps they will see less significance in technology, places and objects, and more in the ideas that shaped the legacy we bequeathed. One of the questions they will surely ponder will be how it was possible for economists living in our age to be so utterly inconsistent in how they ran our affairs.

The data demonstrating the vast chasm now opening between expected economic growth and what the Earth can indefinitely supply to sustain it becomes ever more clear in its implications. Despite strident warnings, the advice and advocacy governments and corporations receive from economists is to basically continue as before, almost irrespective of the consequences.

The conceptual contradictions lying behind this ecological suicide mission almost defy belief. One source of the problem can be seen in how economic stocks and flows have become dangerously confused. When an investor puts financial capital into a company, they expect to derive a flow in the form of a dividend. If the company is well run, the dividend should continue to flow, year after year, while the stock remains intact, and ideally grows in value. If stocks are instead liquidated and taken as a flow of income, then the flow stops, as the capital is spent. Bankruptcy follows.

In 2009 the fund manager Bernie Madoff shocked the world when it was revealed how he had for years been cheating investors by paying dividends from capital. He was taking investors’ money, but not investing it. He was instead paying dividends from new investors’ funds. The only way his scheme kept going was through defrauding new investors. The longer it went on, the bigger the deception needed to sustain it. In the end his so-called Ponzi scheme collapsed, and when it did Madoff’s investors lost billions of dollars. This is unfortunately a rather apposite parallel with how many economists treat Nature.

Our economic system relies on Nature in the form of, among many other things, freshwater replenishment, soil fertility, energy, photosynthesis, pollination and carbon storage. As we extract resources and release waste, it is assumed, at least in the fantasy world of mainstream economics, that a continuing flow of Nature will be there to sustain future growth and development. In reality, however, we are not taking a flow of benefits, but liquidating the stock.

Soil loss, depletion of aquifers, deforestation, species extinction and collapsing fish stocks are all examples of where the stock of Nature, or natural capital, is being liquidated faster than it can replenish, but with the encouragement of economists this asset stripping is still counted by society as a dividend, as an economic flow.

As the stock is depleted, so the flow of services provided by Nature, in recycling nutrients, maintaining the air, feeding us and renewing resources such as wood and water, will be diminished. Bankruptcy in this case will be seen in ecological services being disrupted, but unlike in the world of finance no bailout will be possible. There is no reserve of natural capital to draw upon. Once it’s gone, the flows of Nature services that are essential for living will not be there.

What I find utterly remarkable is how society reacts to these two different faces of the same deception. Bernie Madoff was arrested, tried, convicted and condemned to serve 150 years in prison. When it comes to the economists and captains of industry who liquidate stocks of Nature to create an illusion of wealth, they receive knighthoods and other accolades. Instead they are celebrated and held up as role models.

But why do we carry on like this? Is it down to how we largely see Nature as having no economic value? It is after all generally treated as free, and perhaps therein is a large part of the problem. With this monumental economic flaw in mind, I decided to write What Has Nature Ever Done for Us? It charts the scale of the misconception that is taking us towards ecological bankruptcy, while painting a positive picture of how we might respond. I describe through stories what Nature does for us and conclude that we must embark on the road towards a ‘bio-economy’. That is a system in which the biosphere and human economy are seamlessly fused, where the worlds of people and Nature become joined and work in synergy. A bio-economy would be built with the building blocks of culture, design, technology and engineering, and founded on a worldview that sees people in their actual place – which is embedded in Nature.

Can economists help with this? Yes, of course they can, and indeed they must. Should we succeed, the legacy of the bio-economy will perhaps be judged by future historians to be our most important legacy. If we don’t do it, I fear there may not be too many historians in a position to write anything much at all.